A Postscript: Some Thoughts on International Economic Interdependence

Abstract

The central problem of international economic co-operation is how to take advantage of the benefits inherent in economic interdependence while at the same time maintaining autonomy in the pursuit of legitimate economic objectives.* This has been the dilemma posed by the euro-currency system. Reconsider first the benefits which we discussed in Chapters 3 and 4. It is true that gains would occur to deficit and surplus economic units from international trade in financial items even if the euro-currency system did not exist. However, for technical and legal reasons and because the system enjoys certain economies of scale, it is able to provide to its customers more attractive services, a wider range of maturities and highly competitive borrowing and lending rates than are available in alternative financial markets. As a result, operators in the system find themselves in a preferred portfolio position capable of increasing both their current consumption and savings levels. The benefits are thus analogous to those associated with the well-known gains from international commodity trade.